TYPICAL PORTFOLIO construction

EQUITIES:

US STOCKS

Our domestic stock portfolios typically contain 20-35 equity positions. We believe this strikes the right balance of providing appropriate diversification while not diluting our best ideas. Our clients can expect their portfolio to contain many household names but also some less well-known companies (either because they are smaller companies or operate in more obscure industries).

Collectively, our holdings tend to be somewhat defensive in nature. On the growth-value spectrum, our holdings tend to skew a bit more toward value, but we certainly incorporate growth companies into our portfolios as well.

We do not publicly share our current holdings (as this is information reserved for clients), but the below list is a sampling of companies we either currently own or have owned in the past, to give you some sense of the types of companies we own:

  • Boeing

  • Polaris Industries

  • Costco

  • Berkshire Hathaway

  • Elevance

  • Enterprise Products

  • Starbucks

  • Bright Horizons Family Solutions

  • Google

  • Union Pacific

  • Bristol-Myers

  • JPMorgan Chase

  • Delta Airlines

INTERNATIONAL AND EMERGING MARKET STOCKS

We believe that most investors are well-served by having a modest portion of their portfolio invested overseas. We typically invest in mutual funds and ETFs to gain our international exposure, although from time to time, we buy individual stocks and structured products as well. In some situations, we opt to buy "hedged" funds and ETFs which eliminate the currency risk inherent in foreign investments.

ALTERNATIVE INVESTMENTS

We loosely define alternatives as those investments which are not stocks but have the ability to provide stock-like returns. Most sit somewhere between stocks and bonds on the risk/reward spectrum. At various times, our alternatives category has included investments such as:

  • Commodities - raw materials including precious metals, oil, and agricultural products

  • Currencies - foreign currencies and investments linked to those

  • Convertible bonds - debt instruments which offer the ability to convert to stock under certain conditions

  • Option strategies - the rights to buy and sell other securities

  • Long/short strategies - investments which speculate that certain securities will either rise or fall in value

  • Insurance-linked securities - investments which pay the holders positive returns if certain events (often weather or seismic) do not occur

  • Hedge fund strategies - securities which emulate the returns of private investments such as hedge funds

  • Structured products - investments whose returns are linked to the performance of other securities or indices

FIXED INCOME:

BONDS

We have a substantial portion of our clients' assets invested in the bond market, and this is an area of expertise of ours. We are involved in all aspects of the fixed income market. Portfolios often have at least 12-15 positions to ensure adequate diversification. Our client portfolios typically include the following areas of the bond market, though we emphasize certain areas of the bond market at certain times during the economic cycle:

  • Treasury Bonds

  • Agencies

  • Mortgage-Backed Securities

  • Certificates of Deposit (CDs)

  • Investment Grade Corporate Bonds

  • Tax-Exempt Municipals

  • Taxable Municipals

  • Preferred Stocks and Subordinated Debt

  • Sovereign Debt

In addition, we often allocate a smaller portion of clients' bond portfolios to more esoteric parts of the market (which we usually access through mutual funds and ETFs in order to ensure adequate diversification and liquidity). These areas include:

  • High Yield/Distressed Debt (“Junk Bonds”)

  • Corporate Loans

  • Non-Agency Mortgage-Backed Securities

  • Structured Credit

  • Emerging Market Bonds

CASH

Our portfolios normally have about 3% invested in cash at any given time, though we may increase this cash position at certain times based on market conditions and the opportunities presenting themselves.